Claiming medical expense deductions on your tax return is one way to lower your tax bill. To accomplish this, your deductions must be from a list approved by the Internal Revenue Service, and you must itemize your deductions.
You can deduct on Schedule A (Form 1040) only the part of your medical and dental expenses that is more than 7.5% of your adjusted gross income (AGI). This publication also explains how to treat impairment-related work expenses and health insurance premiums if you are self-employed.
If you're itemizing deductions, the IRS generally allows you a medical expenses deduction if you have unreimbursed expenses that are more than 7.5% of your Adjusted Gross Income.
If the value of expenses that you can deduct is more than the standard deduction (as noted above, for the tax year 2024 these are: $14,600 for single and married filing separately, $29,200 for married filing jointly, and $21,900 for heads of households) then you should consider itemizing.
You should itemize deductions on Schedule A (Form 1040), Itemized Deductions if the total amount of your allowable itemized deductions is greater than your standard deduction or if you must itemize deductions because you can't use the standard deduction.
You can claim part of your total job expenses and certain miscellaneous expenses. These expenses must be more than 2% of your adjusted gross income (AGI).
A key part of this decision is that you have to itemize your deductions in order to deduct medical expenses (note that if you're self-employed and you purchased your own health insurance, you can deduct the premiums you paid without itemizing your deductions, using Line 29 of Form 1040 Schedule 1.
If you paid the premiums for a policy you obtained yourself, (such as through the marketplace) your health insurance premium is deductible when they are out-of-pocket costs.
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners.
If you or a loved one live in an Assisted Living or Memory Care community, all or part of your care costs may qualify for the medical expense tax deduction. The medical expenses included in the fees for Assisted Living or Memory Care can be written off on taxes—with some qualifications and restrictions.
Examples of Medical and Dental Payments you CANNOT deduct:
Health club dues, gym membership fees, or spa dues. Electrolysis or hair removal. The cost of diet food or nutritional supplements (vitamins, herbal supplements, "natural medicines") Teeth whitening.
Calculating Your Medical Expense Deduction
The Consolidated Appropriations Act of 2021 made the 7.5% threshold permanent. You can get your deduction by taking your AGI and multiplying it by 7.5%. If your AGI is $50,000, only qualifying medical expenses over $3,750 can be deducted ($50,000 x 7.5% = $3,750).
If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents during the taxable year to the extent these expenses exceed 7.5% of your adjusted gross income for the year.
Prescription drug costs: Prescription drug expenses typically count towards your out-of-pocket maximum. As you accumulate costs for prescription medications throughout the year, these expenses are usually applied toward reaching your out-of-pocket maximum.
Given that the average household income in the U.S. is $87,864, as of 2023, that means the average American family spends at least $4,393 in these expenses each year.
Medical expenses are only deductible after they exceed 7.5% of your Adjusted Gross Income (AGI). If you have high expenses or low AGI, or both, you might meet this threshold.
You will not need to send the IRS proof of your health coverage. However, you should keep any documentation with your other tax records. This includes records of your family's employer-provided coverage, premiums paid, and type of coverage.
Schedule A (Form 1040) for itemized deductions
Taxpayers use Schedule A (Form 1040, Itemized Deductions or 1040-SR, U.S. Tax Return for Seniors) to figure their itemized deductions. In most cases, their federal income tax owed will be less if they take the larger of their itemized deductions or standard deduction.
When being audited, there are two things the IRS might ask for in order to prove most deductible expenses: a record of payment and a receipt of payment. A credit card statement can only serve as a record of payment, but a receipt may be needed to provide the details of such purchase.